There are just a few key requirements that must be met in order to qualify for a Social Security benefit based upon the earnings record of your current spouse:
1. You must be married at least one year. 2. You must be at least 62 years old. 3. Your spouse must have filed for his or her own Social Security benefit.
Though this is pretty straightforward, due to the fact that there are many combinations of ages, benefit amounts and other circumstances that must be taken into account, it can be difficult to understand the impact your filing age can have.
Let’s take a common situation where once spouse is slightly older than the other. Assume that the husband is currently age 64 and the wife is 62. Both have a “Full Retirement Age” (FRA) of 66. His benefit is higher than hers because, like most Baby Boom women, she took 11 years out of the “paid” workforce for family caregiving, such as helping older relatives or raising children.
The wife would like to start receiving a Social Security benefit. However, the husband wants to wait until he stops working, which could be a few years from now.
Is the wife eligible for a “spousal” benefit? No. Although she meets the first two criteria, her husband has not filed for Social Security himself. There is only one type of benefit she is entitled to at this point: the one based upon her own earnings record.
Claiming “Early” Reduces Your Own Benefit
Now, we’ll add some numbers to this example. Let’s say that at full retirement age, the husband’s monthly Social Security benefit would be $2,000/month and the wife’s would be $800. (For simplicity sake, we are not going to include annual cost-of-living adjustments.)
If the wife chooses to file for Social Security at age 62, she will receive $600/month- not $800/month. Because she is filing “early”- that is, before she is full retirement age- her benefit is reduced by 25%, or $200. ($800-$200= $600)
When Spouse #2 Files
Assume that the husband retires at age 66 and files for his Social Security retirement benefit. Because he is full retirement age, he will receive 100% of the benefit he has earned, or $2,000/month.
In addition, the wife now qualifies for a spousal benefit. This is not automatic! If you are already receiving Social Security benefits when your partner files, you must request your spousal benefit. This can only be done by calling Social Security at 800-772-1213 or visiting your local Social Security office.
Claiming “Early” Reduces Your Spousal Benefit, Too!
The maximum spousal benefit someone can receive is the amount equal to half of their partner’s full retirement age benefit. In this example, it would be $1,000 (50% of $2,000).
In addition, if you are eligible for a benefit based upon your own work history and this is a higher amount, you will only receive your own benefit. In other words, no additional spousal amount is added to this.
If your own retirement benefit is less than the spousal amount, you will get an extra amount that brings you up to that level.
Key concept: If you are under full retirement age when you apply for spousal benefits, your spousal amount will also be reduced.
The Reduction Calculation
Your spousal benefit is reduced by a fraction of a percent per month, multipled by how many months ahead of your full retirement age you file for this benefit.
In our example, let’s assume the wife is exactly 64 years old when she applies for her spousal benefit- two years (24 months) before she is full retirement age. To determine her spousal amount, Social Security starts with the maximum she could receive ($1,000) and reduces this by 25/36ths of one percent ($6.94) for each month until her 66th birthday, a total of $166.56.(1) In other words, the wife’s reduced spousal benefit would be roughly $833/month ($1,000-$166).
Since this is $233 higher than the $600 she is receiving based upon her own earnings history, Social Security will boost her benefit by this amount.
Fortunately, you don’t have to calculate your spousal benefit! You can estimate it by using Social Security’s online calculator at http://www.socialsecurity.gov/OACT/quickcalc/spouse.html.
The main thing to keep in mind is that claiming a Social Security benefit before you are full retirement age has consequences. Before you apply, you should find out- by contacting Social Security or working with your financial advisor- what those consequences are.